Make sure everything is squared away for the end of the tax year:
¨ Contracts. Have you invoiced retentions that are not payable till the next tax year? If they are payable in the current year they are taxable as income. If not, they will be taxable in the year you are legally entitled to receive them. Make sure you make a note to tell us.
¨ Employee expenses. Amounts owing to employees for holiday pay, bonuses, redundancy payments, long service leave etc. can be claimed, if you have committed to them at year end and pay them within 63 days of balance date. Check holiday pay has been calculated correctly.
¨ Credit notes. Look out for any credit notes issued to customers after balance date. You may be able to apply them to this tax year, potentially reducing your taxable income for the current year.
¨ Expenses. Can you pre-pay any expenses before 31 March, such as stationery, postage and courier charges? You may be able to claim for them. Check with us as some types of expenses have limits on the extent to which they are claimable if prepaid, such as rent, insurance, travel and accommodation.
¨ Debtors. Review your debtors. Did you take reasonable steps to recover bad debts? If so, make sure your records show this. If you write off bad debts before 31 March, you may be able to claim a deduction. Make sure to give us the details so we can check any GST adjustments are correct.
¨ Fixed assets. Review your fixed assets. Are you still using all of them or can some be written off?
¨ Loss offset elections and subvention payments. Let us know as soon as possible if you think the company will make a loss.
¨ Discounts for prompt payment. Do you offer these to debtors? If so and if you maintain a discount reserve, this may be deductible. Make sure your records are clear. Different rules apply in the first year of offering discounts from subsequent years and change depending on the period of credit extended to customers.
¨ Repairs and maintenance. Undertake planned maintenance or repairs before year end to ensure a tax deduction. Deciding whether expenditure on an asset is classified as repairs and maintenance (which would be deductible) or as a capital expense is not always clear. Contact us if you aren't sure.
¨ Dividends and imputation credits. Review planned dividend payments. The imputation credit account must not have a debit balance at 31 March otherwise penalties may arise. Contact us before 31 March to help you.
¨ Stock. Do a stocktake. Dispose of obsolete stock by year end or write it down to its net realisable value (the lesser of cost or market value). If your stock is worth less than $10,000 and your turnover is less than $1.3m for the year, you won't need to include your stock movement for tax purposes.
Changes from April
The minimum wage will increase from $14.75 to $15.25 per hour. Training and new entrants' minimum wages will increase from $11.80 to $12.20 per hour.
Health and safety
Changes to health and safety laws take effect from 4 April 2016. The new law says you need to take reasonably practical steps to manage any critical risks – those that could cause illness or injury serious enough to keep someone off work. Have you assessed how the new laws affect your business and implemented anything you need to? If not, contact us for more information on the rules.
The Employment Standards Legislation Bill has been passed, bringing into effect from 1 April 2016 some important changes to the employment statutes. These include extending parental leave, spearing zero hour contracts and strengthening compliance with minimum employment standards.
Parental leave: A greater range of people - for example, certain casual workers and seasonal workers, employees with more than one employer and those that have recently changed jobs - will have the opportunity to access paid parental leave, which is up to 18 weeks from 1 April onwards. The Parental Leave and Employment Protection Act will also extend to a wider range of primary carers than biological or formal adoptive parents.
Employees on paid leave will be able to take 'keeping-in-touch' days, enabling them to work limited hours during their paid leave period.
Zero hours contracts and other restrictions: Employers won't be able to:
§ expect employees to be available to work without guaranteeing hours or paying reasonable compensation
§ cancel a shift without giving employees reasonable notice and reasonable compensation, both of which must be set out in an employment agreement
§ make unreasonable deductions from wages
§ unreasonably restrict an employee's secondary employment
Enforcing minimum employment standards: Focused on ensuring employers pay at least minimum wage and give employees their proper holiday entitlements. Enforcement measures include a new infringement notice regime, clearer record-keeping requirements, and tougher sanctions for serious breaches such as exploitation.
Check employment records are comprehensive and employment agreements comply with the standards.
Super, pensions and benefits
Superannuation and Veteran's Pension rates increase on 1 April 2016. The rates (before tax) for a married couple will be $671.48, $443.43 a week for a single person living alone and $407.53 for a single person sharing accommodation.
Benefits for main beneficiaries and rates for student allowance recipients with dependent children will increase by $25 a week after tax.
Working for Families rates will increase for low income working families by up to $12.50 and $24.50 for very low income working families.
How well do you know your breakeven point?
Most people are familiar with the concept of breaking even. Your breakeven point tells you how many units you need to sell or what dollar value in sales you need to achieve just to cover your costs. Once you know that, you know the point you need to pass to turn a profit.
Pretty easy right?
But a breakeven point isn't set in stone. It will shift as your business grows, costs fluctuate and as you continue to surf a constantly changing business environment.
A breakeven point therefore becomes something you keep in play over time as a tool for you to think about your sales, costs and pricing in a different way.
For instance, say you know your breakeven point and you take it at face value. Tell your team. It's a powerful motivator for your sales people to know exactly what the numbers are to put the business in profit.
Say you don't accept your breakeven point at face value. What can you do? Can you reduce your costs to lower your breakeven point so you can start earning profit sooner? That might lead you into analysis of your fixed and variable costs to judge whether you have room to move.
Or does your breakeven point uncover an issue with your pricing that you need to deal with? Lifting your pricing might mean your numbers are into profit sooner but you might have to think about whether your market will tolerate that. Does that line of thought indicate that you simply have to lift your sales volume? And then you're looking at marketing strategies, market reach and coaching your team on what the sales goals really are.
If you're not sure you really have a handle on analysing your breakeven point, we're happy to talk through options which could increase your profit.